Oil price crash

May 15, 2020

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Credit: John Cole, The Scranton Times-Tribune, PA

In a notice published on Wednesday, the U.S. Commodity Futures Trading Commission said oil traders should brace for negative oil prices when the West Texas Intermediate (WTI), a benchmark in oil pricing, futures contract for June expires next Tuesday. Oil was heading for a third weekly gain—topping at more than $27 per barrel on Thursday—after dropping into the negatives for the first time in history as a result of the Russia-Saudi Arabia oil price war and a significant drop in demand due to the COVID-19 pandemic. On April 20, WTI traded as low as negative $37 per barrel as energy companies ran out of room to store its surplus.

The volatility of the oil market has created a challenge for aspiring global oil producer Suriname. Significant oil discoveries earlier this year made off the country’s shore injected a degree of excitement about its economic future. However, the brutal collapse of international oil prices has crushed the excitement over its oil opportunities. As Scott MacDonald writes for Global Americans, for Suriname, once eager to expand its global presence through the sector, the uncertainty means that while it’s good to have commercial quantities of oil, it will be a long time before it can reap the wealth of its recent discoveries.